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Elizabeth Warren Wants to Get the Cannabis Industry Out of Banking Limbo

January 3, 2017
Sen. Elizabeth Warren is leading a new effort to make sure vendors working with cannabis businesses don't have their banking services taken away. (AP)
BOSTON (AP) — As marijuana shops sprout in states that have legalized the drug, they face a critical stumbling block — lack of access to the kind of routine banking services other businesses take for granted.

U.S. Sen. Elizabeth Warren, a Massachusetts Democrat, is leading an effort to make sure vendors working with legal marijuana businesses, from chemists who test marijuana for harmful substances to firms that provide security, don’t have their banking services taken away.

“It's just a plain old safety issue. You don't want people walking in with guns and masks and saying, 'Give me all your cash.'”
US Sen. Elizabeth Warren, D-Mass.

It’s part of a wider effort by Warren and others to bring the burgeoning $7 billion marijuana industry in from a fiscal limbo she said forces many shops to rely solely on cash, making them tempting targets for criminals.

After voters in Warren’s home state approved a November ballot question to legalize the adult use of cannabis, she joined nine other senators in sending a letter to a key federal regulator, the Financial Crimes Enforcement Network, calling on it to issue additional guidance to help banks provide services to marijuana shop vendors.

Twenty-eight states have legalized marijuana for medicinal or recreational use.

Warren, a member of the Senate Banking Committee, said there are benefits to letting marijuana-based businesses move away from a cash-only model.

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“You make sure that people are really paying their taxes. You know that the money is not being diverted to some kind of criminal enterprise,” Warren said recently. “And it’s just a plain old safety issue. You don’t want people walking in with guns and masks and saying, ‘Give me all your cash.'”

A spokesman for the Financial Crimes Enforcement Network said the agency is reviewing the letter.

There has been some movement to accommodate the banking needs of marijuana businesses.

Two years ago, the U.S. Department of the Treasury gave banks permission to do business with legal marijuana entities under some conditions. Since then, the number of banks and credit unions willing to handle marijuana money rose from 51 in 2014 to 301 in 2016.

Warren, however, said fewer than 3 percent of the nation’s 11,954 federally regulated banks and credit unions are serving the cannabis industry.

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Taylor West, deputy director of the National Cannabis Industry Association, a trade organization for 1,100 marijuana businesses nationwide, said access to banking remains a top concern.

“What the industry needs is a sustainable solution that services the entire industry instead of tinkering around the edges,” Taylor said. “You don’t have to be fully in favor of legalized marijuana to know that it helps no one to force these businesses outside the banking system.”

Sam Kamin, a professor at the University of Denver Sturm College of Law who studies marijuana regulation, said there’s only so much states can do on their own.

“The stumbling block over and over again is the federal illegality,” he said.

The federal government lumps marijuana into the same class of drugs as heroin, LSD and peyote. Democratic President Barack Obama’s administration has essentially turned a blind eye to state laws legalizing the drug, and supporters of legalizing marijuana hope Republican President-elect Donald Trump will follow suit.

Related

Cannabis Strategy Under Trump: Here Are Four Ways to Play It

Trump officials did not respond to a request for comment. During the presidential campaign, Trump said states should be allowed to legalize marijuana and has expressed support for medicinal use. But he also has sounded more skeptical about recreational use, and his pick for attorney general, Alabama U.S. Sen. Jeff Sessions, is a stern critic.

Some people in the marijuana industry say the banking challenges are merely growing pains for an industry evolving from mom-and-pop outlets.

Nicholas Vita, CEO of Columbia Care, one of the nation’s largest providers of medical marijuana products, said it’s up to marijuana businesses to make sure their financial house is in order.

“It’s not just as simple as asking the banks to open their doors,” Vita said. “The industry also needs to develop a set of standards that are acceptable to the banks.”

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  • Mike_Scarborough

    I love this senator. I just wish she was thirty years younger so we could have her around longer.

    • Cass

      I’d like to see her as the next President!

  • K420

    Hope they listen to her. The government is being hypocritical about it all since they get paid by the alcohol and pharma companies to keep it scheduled as having “no medicinal value” so they can profit as much as possible and not have legal cannabis hurt their industries.

  • BenSamizdat

    I’m calling BULLLLLL-SHEEEEEEEET. We all know that Warren had YEARS to do something on this and she chose to wait until she had no possible chance (with the Republicans in control) to pull it off. Polilticians pull this move all of the time. I gar-un-tee you Warren never had any intention of helping the Cannabis industry or she would have already done this years ago.

    • DianeS

      Considering that the Democrats only had a filibuster proof Senate for six months of the Obama administration, exactly when would have been a good time? Meanwhile, the more states that legalize, the more pressure there is to get the banking straightened out. I am still hoping that, at the very least, it will be reclassified schedule 2 really soon now since the clock is ticking.

      • BenSamizdat

        Does the minority party Filibuster EVERY bill? No??? Then what makes you think that fixing this would have resulted in a Filibuster? The Dems had the majority. Warren had all the time in the world to bust a move. What I’m saying is that pols of both parties have a system where they wait until they have almost NO power whatsoever and then they trot out these Galvanize-the-People bils that have ZERO chance of passing. We only have two centuries of examples in America of this kind of behavior. The veneer is so thin at this point that even the naive should know her game.

        • DianeS

          What makes you think this wouldn’t have resulted in a filibuster? Meanwhile, Warren has been working on banking regulation and trying to make them pay for their sins. Pouncing on her is totally unjustified. Remember, the support has to be there – as more states legalize, the more support there is for this type of reform. You can’t just tilt at windmills, there has to be a chance.

          • BenSamizdat

            “What makes you think this wouldnt have resulted in a filibuster?” Because the Dems could have attached it to any must-pass bill? Learn how the game is played Diane! And for the record, Warren’s attack on the banks is a new ploy too. Just more Galvanize-the-Troops opportunistic righteousness. Since it’s too-little too-late for most of her machinations, therefore all we are seeing is ‘Brand Warren’ flex its muscles. Does it look like she is going to run for President in 4 years? I think we are going to see more Warren crusades as she tries to find her base. What I’m guessing is that the States, seeing as they are getting more tax revenue from cannabis than all other businesses combined (re: Colorado!!!), the States are talking about just doing their own insurance, i.e. their own bank system. I think when enough States have done this the Fed’s will feel left out of the action and something will happen then. But bottom line – Warren is “tilting at windmills” as you put it. No chance whatsoever to get something passed.

  • Tim Bambam

    Its is kind of funny that when people in the Marijuana business start trying to create their own banking system is when you finally get someone from Congress to start the conversation about the need for a banking system that is inclusive to Marijuana businesses.

  • robWeeve

    if HSBC can launder money for south of the border drug cartels why can’t all banks accept legal cash from legal American marijuana sales?